Common Pitfalls in Project Portfolio Management Part 2

Jan 24th 2017 | Posted by Admin

Common Pitfalls in Project Portfolio Management -- Part 2

This is part 2 of a two-part series on the common pitfalls in project portfolio management (PPM).

Project portfolio analytics

Project portfolio analytics are the tools, algorithms, and heuristics necessary to evaluate project-related data for use in PPM decision-making. This data includes elements of resource capacity, ROI, portfolio impact, value, risk, and other elements important to the organization.

Common pitfalls

In numerous instances we have seen organizations fall into one of the following traps.

Purchasing and implementing a PPM tool before the process is defined and accepted: PPM tools (Planview, Clarity, etc.) are expensive and, in most instances, should be purchased after the company has accepted the PPM function.

Poor expectation setting: Not every PPM tool is capable of performing all analytical needs. Some of the most well-known PPM tools don’t even include the most basic algorithms to conduct “what if” analysis for use in understanding impact to the current project portfolio. The Gartner “golden quadrant” tools do not have all the capabilities many PPM functions need. Make sure to complete a thorough tool evaluation that’s based on clear requirements.

Underleveraged: We’d like to see PPM tools used for more than time tracking against projects, but they are often underleveraged for only this use. PPM tools are fully leveraged when governance teams require PPM analytics for decision making; resource managers are using the tool proactively as a means to better manage their resources; and team members are seeing the value, often when decisions that impact them can be sourced from the PPM tool and improve their work-life balance and make a positive impact on the company

The previous two pitfalls can become root causes for underleveraged PPM tools. When PPM Tools are purchased and implemented before the process is defined and accepted, this opens the door for the tool to become an unneeded expense if the function is not adopted. Similarly, when incorrect expectations are set for the tool and not reached, staff will reject its use.

Poor integration with the corporate finance function: PPM tools traditionally integrate with financial systems and/or act as a repository for project and program financials. From time to time, we see PMO’s that fail to plan to integrate with the finance organization as a key stakeholder.

This will more often than not lead to a disgruntled and powerful stakeholder who also is an influencer in supporting new functions. When you consider that project scope often changes (along with project financials), having a strong influencer from finance will be critical in creating a smooth change-management process.


Corporate strategy and culture

The processes that drive the direction of the company and identify markets/businesses in which the company competes are the linchpin to successful PPM and project success rates.

Common pitfalls

While we have touched on aligning decision-making criteria and creating a level of formalization, it should be clear that the ability to align with a strategy is dependent upon the clarity of the corporate strategy. Its corresponding objectives must be formally defined and measured.

For organizations that have full-time corporate strategists and may be advanced to a level of strategy management, such as balanced scorecard or others, a key factor in successful PPM is in place. For organizations that are informally managing strategy, we recommend you take steps to formalize the process before getting too far down the path on PPM. A formal strategy-management process drives the organization to provide clarity and prioritization of corporate- and division-level objectives that are already aligned to the strategy.

Many times with the bottom-up approach to PPM, clients attempt to build strategy as a part of the PPM/governance function. This can work for some organizations, but can also lead to confusion and frustration because projects that turn out to be out of strategic alignment have already left the station.

There are several other common pitfalls.

Confusing project-selection criteria with product-selection criteria: We sometimes see project governance teams filling the gap for product assessment. Projects to implement products should be initiated after the product assessment is completed.

Lumping project prioritization in with project sequencing: Project prioritization is the act of weighing one project against decision criteria and other projects to determine their level of priority for execution. Project sequencing is the process of determining the optimal fit for the project in the current portfolio. In other words, just because the project is priority one does not necessarily mean it gets done first when there are other projects in the portfolio.

Unintended consequences may occur if the opposite is true, including increased costs and potential staffing issues. A portfolio impact assessment should be completed in advance to guide executive decision-making regarding the sequence of the project.

Failing to evaluate strategic risk: In many instances, obvious elements such as demand management and capacity come into play in the management of project risks, but strategic risk is often over looked. Strategic risk can take the form of brand tarnishing, negative impact to core products and services, or loss of market share. Considering the number of “black swan” projects, strategic risk should be a significant element in management of the project portfolio.

No formalized plan to manage culture and behaviors: Technology and process don’t solve project failures. People do. Some clients step their toes into the water as a substitute for a concrete plan to change behaviors in the organization. We advise our clients to recognize that their people are being reinforced a certain way (either purposely or accidentally) to perform the “current state” of their job.

Performance expectations are commonly missed when PPM is introduced into the organization because it is seen as somebody else’s job. The fallacy of this view is seen in the fact that project work is people work. The staff members have a stake in the project’s outcomes and commonly work in a matrixed environment across different departments. Therefore, PPM is everybody’s job. Yet it is easy to see how many would want to pass PPM over the fence as it involves complex and mature practices (demand management, resource management, etc.) and requires staff to adopt new skills and types of work.

Failing to plan to change behaviors guarantees at minimum a difficult transition and at most failure to adopt PPM long term.

Failing to “chunk” the project work: Whether it be the use of Scrum or Waterfall, breaking projects down into manageable chunks has been proven to increase project success rates, but it is a challenge for many clients. Behaviors have been ingrained in executives over the years to be “pleasers” and that often results in the executive sponsor reporting out a project finish date before a project assessment has even been completed. Consider a whole portfolio of projects with end dates established in this manner and you have a very inaccurate portfolio.

Conditioning away from this behavior to a set of deliberate PPM steps, to include finish date estimates on phases of the project work is difficult and should be considered a strategic activity for the organization. Why? Companies that improve project delivery (or better yet, project productivity) create a sustainable competitive advantage over companies that do not. Improving project success rates not only makes a company more competitive, it improves the company’s bottom line.


How WGroup can help

WGroup has helped many clients design, build, and manage the discipline of project portfolio management. While our approach is robust in implementation, it is also pragmatic and anticipates the common pitfalls we have seen in our extensive experience.

For clients with a PPM function in place we can help by evaluating the client’s strategy and project governance model, project analytics, culture, and behaviors to build the roadmap to optimize PPM benefits and ROI. And for clients just starting out, we can help by building the strategy and roadmap for PPM implementation specific to your company.

We employ our deep expertise in constructing sophisticated financial models and bring up-to-date insights about industry best practices and potential vendor tools to drive tangible business results.

We provide our clients with comprehensive advice down to the design and implementation of detailed PPM processes. We leverage the rich experience in hands-on portfolio optimization from our pool of senior consultants who are all former CIOs, IT managers, and business leaders.

Ultimately, we drive business value, which is above and beyond establishing resource allocation or prioritization processes.

To learn more about WGroup's services, visit http://thinkwgroup.com/services

Get the latest WGroup insights delivered to your inbox